China lottery new rules hint offline sales red tape cut

An updated version of China’s regulations concerning the country’s official lottery, effective from October 1 onward, aims to reduce red tape for the authorisation of offline sales of lottery products, several experts conducting research into the industry remarked to GGRAsia.

But uncertainties remain as to whether the Chinese authorities will lift a suspension – in place since 2015 – regarding online sales of official lottery products.

Notwithstanding that ban, mainland China’s total annual sales from official lottery products are still roughly twice those of aggregate yearly gaming sales recorded in Macau casinos. Lottery sales increased 8.1 percent in full-year 2017 to nearly CNY426.67 billion (US$62.4 billion), show data from the country’s Ministry of Finance published in January. In the same period, Macau’s casino gross gaming revenue expanded by 19.1 percent, to MOP265.74 billion (US$32.9 billion).

The updates to the lottery rules – published on Monday – mentioned “online sales of welfare lottery tickets and sports lottery tickets without authorisation” as being illegal activities.

But another important message was a pledge for simplifying authorisation of offline sales. So said respectively Su Guojing, who has been an adviser on lottery matters to China’s central government and who founded an industry think tank called China Lottery Industry Salon; and Professor Li Gang of Shanghai Normal University.

Mr Su told us: “For lottery issuance institutions, [up to now] they had to seek approval from their respective provincial department of finance and department of civil affairs whenever they wanted to put forward special promotions or offer new prizes for their lottery products, especially during holiday times like the National Day break or Chinese New Year,” said Mr Su, referring to two major public holidays.

“But now with the amended rules, they don’t need to do that anymore,” Mr Su added.

Prof Li, a scholar researching China’s lottery industry, said another major change was that institutions authorised at provincial level to operate the lottery systems can, in the words of the new rules “depending on their needs”, commission a professional test unit to conduct a technical review of their lottery products. “Before, these institutions have had to commission test work whenever they wanted to launch new lottery products or change the products,” Mr Li said.

Heightened control

“Another important change that comes with the amended regulations is that in the last article, it specifies all of the other laws that can apply to penalise government departments – and those officials responsible for regulating the lottery market – if they fail to do their job,” Mr Li added.

Mr Su and Mr Li drew attention to the fact that the Chinese authorities had, as recently as August, indicated more central government departments than before would be engaged in monitoring the mainland’s lottery market. An August 21 statement from China’s Ministry of Finance – which mentioned that it had not so far given approval for any lottery sales outlets to conduct sales online – was endorsed by 11 other government departments.

“That August statement basically spells out that now the Chinese authorities have a more specific division of work when it comes to monitoring the lottery market. For instance, the Cyberspace Administration will be cleaning up information online that is related to illegal [lottery] sales; and the banking regulator will be responsible to deal with those that provide settlement services for any illegal online [lottery] sales platform,” Mr Su said.

It is likely several issues important issues will require resolution before online sales can contemplated, Mr Li remarked to GGRAsia.

“For instance, there are questions regarding revenue distribution across different [geographical] areas. Say, if you are in Shanghai and you have purchased a lottery ticket via a website that is actually hosted in Beijing, where and how should the [sales] money be divided across these two cities?” Mr Li said.

“Another issue is that Internet [commerce] makes it difficult to know who actually purchase a lottery ticket. And when things go online, a problem that can emerge is underage gambling on lotteries,” the Shanghai Normal University scholar added.